Is there any classification on where to spent per-diem and where not to spent?

Hi Everyone,

Its a great debate…
But there are few more points to it… viz:

Is there any classification on where to spent per-diem and where not to spent?
Like I spent per-diem to buy a laptop (this amount is taxable?) and if I spent amount in food (non-taxable).
If above is wrong can you share any link to govt website pointing it…
Also do we need to provide proofs? like cases where we are using laundry in USA, I usually put 4-5 $ and dont get receipt so any suggestions on how to handle such cases??

Thanks
Ankur

Hi Ankur,

  1. The basic point to understand is that the per diem is paid to an employee to help with his day to day expenses while he/she is on BUSINESS tour. When your company provides you a lump sum amount per day, they do not expect you to submit specific bills to be submitted. You are free to spend that money whatever way you feel.
    This is pretty common in IT companies who send their employees to US for shot term business tours. They are paid a fixed per day allowance and they can either save, buy laptop or pay rent or eat food or do whatever they want to do with that money.

But, if you save something out of it and take it back to India, it is considered your income and is taxable, if you declare it in your IT return.

  1. The question of legitimate expense (allowed or not allowed) arises only when your company reimburses you for the per day expenses. In this case, the expenses would be governed by your company’s policy on what they allow and what not.

This is the case when company issues a company owned, company managed credit card (example AMEX card). In this case, they just reimburse for the expenses that they allow as business expenses. In this case, there is no tax liability for employee.

Let me know if you need more information.